Apple may have the iPhone, but the iPhone doesn't have the Xbox. Today, Microsoft leveraged their most compelling entertainment asset, the Xbox 360, into Windows Phone 7 Series. But what does this mean, practically speaking?

It's astounding that until this moment, three years after the iPhone, the biggest software…
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(Note: If you don't understand what the heck Windows Phone 7 is, read this first.)

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Here's the official word from Microsoft on how WP7 will incorporate Xbox Live.

"Games—This hub delivers the first and only official Xbox LIVE experience on a phone, including Xbox LIVE games, Spotlight feed and the ability to see a gamer's avatar, Achievements and gamer profile. With more than 23 million active members around the world, Xbox LIVE unlocks a world of friends, games and entertainment on Xbox 360, and now also on Windows Phone 7 Series."

What we saw in Microsoft's demo today fleshes that concept out a bit. There will be a Spotlight section, with your Xbox Live avatar and notice of friends' achievements. And of course, there will be games—"premium titles" with achievements and multiplayer connected to other cellphones, PCs and Xbox 360 consoles.

Don't let the simple interface fool you. Xbox Live on a phone is more than having your avatar on one more screen because of the three types of games I believe we'll see on Windows Phone 7.

The Three Games of Windows 7 Phone

The first type of game will be a lot like an iPhone title. Powerful pocket hardware will push impressive graphics (that make the PSP and DS look sad). That's a simple idea that I know all of you can wrap your heads around.

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Now, some of these games may be released cross-platform, as Microsoft teased today. They'll be what I classify as the second type of gaming on Windows Phone 7—casual, connected titles that allow anyone with a Live account to join in (no matter if they're on a WP7, 360 or PC). You won't see the most beautiful XBLA titles on the phone, of course, but something like Worms? Why not? A buy it once, play it anywhere model would make this type of game incredibly enticing. UPDATE: It appears that Windows Phone 7 will run XNA framework, meaning it should be (theoretically) compatible with the Xbox 360's XNA games.

Windows Phone 7 is only three days old, but leaked documents from Microsoft supposedly showing…
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The third type of game—the one that will appeal most to the hardcore gamers—is the Xbox 360 expanded title, something unmentioned by Microsoft but that I see coming a mile away. Imagine a minigame accompaniment to Halo that could unlock more content/resources/anything. Now imagine that such a game is driven by some of the most powerful handheld processors in the world. (You should be picturing something that looks a lot like Call of Duty's Nazi Zombies on the iPhone.) But with the iPhone, Nazi Zombies never leaves your phone—nothing about it will affect your Call of Duty experience on your home console.

For some reason, shanking a Nazi zombie and watching a mist blood spray across the screen, with…
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Such no longer needs to be the case when the game is connected to Live. AAA franchises can make their way to the mobile space with Microsoft in a way that they never could with Apple. Put differently, pocketable games can have console-level repercussions.

While the iPhone is a treasure trove of pocketable amusements, they're pretty much self-contained entities working in a closed box. Sadly, pretty much the same thing can be said about the Nintendo DS or Sony PSP. Nintendo and Sony have both experimented with connecting their mobile and home platforms on a title-by-title basis (and no doubt, the PSP's early promise of Remote Play still sounds like a revolutionary idea today), but neither company has been all that successful in bridging the gap to create a seamless digital experience.

Also, the PS3 becomes unusable in any other form while its in Remote Play mode. And...
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Plus, let's face it, neither Sony nor Nintendo is relevant in the smartphone business—the present and future of pocket gaming. And while the iPhone is tough competition, it's one phone. Windows Phone 7 Series is a specification (that includes baseline hardware specs and software specs) for many phones that could potentially be on many carriers.

But when it really comes down to it, is Microsoft selling us the Xbox 360 experience on cellphones, or are they pitching putting cellphone games on the Xbox 360? And will anyone want to create original, non-ported content for the Windows 7 Phone Series when there are 75 million iPhones and iPod touches out there already?

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Time will tell. Despite what promises to be the most full-featured mobile gaming platform of all time, Microsoft must woo developers to create compelling mobile content before any of this matters.